Adding solar power to a multifamily property might seem like an easy choice. However, from Freddie Mac's view, it was much more complex than most owners and investors realized. So, they now have a Multifamily Seller/Servicer Guide that includes a section on solar agreements, as well as a solar analysis document.

A stumbling block in the past related to three different categories of financing. The first was an outright ownership of the solar equipment by the borrower, providing little risk to Freddie Mac. The second is a third-party-owned solar structure, under which the borrower contracts with a third party that owns, installs, and manages the solar equipment on the borrower's site. The third is an affiliate-owned structure, under which a large multifamily sponsor creates a separate legal entity from the borrower to own and maintain the solar panels, often as a way of claiming federal tax credits.

It is the second and third structures that create increased risk, as there is now complexity in ownership and a question of who is borrowing money to purchase the property when a physical structure on the building isn't part of the transaction. Some of the risks include tax credit capture, subdebt to public utility regulation, and local zoning codes.